Tax preparation for online sellers
Quick answer: Marketplace 1099-Ks report gross sales, before refunds, fees, shipping, and the cost of what you sold. Filing from the 1099-K alone overpays badly. We rebuild the real profit with inventory and fees handled correctly.
Cost of goods sold
Materials, products, and inventory accounting turn gross sales into actual profit. This is the big one.
Marketplace and payment fees
Listing fees, final value fees, and processor cuts reduce income before tax ever applies.
Shipping and packaging
Postage, boxes, mailers, and label printers count, whether or not the buyer paid a shipping charge.
Home workspace and storage
A dedicated workspace or storage area for inventory can qualify under the home office rules.
Hobby vs business
The distinction changes everything about what you can deduct. We document the profit motive properly.
Sales tax reality check
Marketplaces mostly collect sales tax for you now, but direct-site sellers have their own obligations. We flag what applies.
Educational overview, not tax advice. Every deduction here has rules and limits, and a real preparer reviews your actual situation before anything is filed.
The 1099-K is way more than I actually made. What now?
Normal. It reports gross transactions before refunds, fees, shipping, and cost of goods. Your return reports the real profit; the difference is documented, not ignored.
Do I owe taxes on reselling used items?
Selling personal items below what you paid is generally not taxable income, but a pattern of buying to resell is a business. The paperwork differs, and getting it right prevents matching notices.
How do I value my inventory?
At your cost, tracked at year end. Photos plus purchase records are enough for most small sellers, and we set up a count routine that takes an hour a year.